KRISTEN HAYS, Copyright 2008 Houston Chronicle |
October 30, 2008

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Exxon Mobil again broke its own quarterly profit record amid the summer’s unprecedented oil prices, raking in 58 percent more than a year ago.

However, the world’s largest publicly traded oil company’s trend of declining production continued despite project start-ups off the coast of Angola.

Royal Dutch Shell also rode high oil prices to a 22 percent increase in quarterly profits, but Europe’s largest oil major also saw production fall.

However, Houston-based Marathon Oil bucked the production trend among integrated companies as its output available for sale rose 4 percent amid quarterly profits that more than doubled.

Rex Tillerson, Irving-based Exxon’s chairman and CEO, said in a statement that despite continuing uncertainty in global financial markets, the company maintains a strong financial position and remains committed to its plan to spend about $25 billion on capital projects. Exxon has spent about $19.3 billion on such projects so far this year.

Shell CEO Jeroen van der Veer also said in a statement that the company is “watching the world economic situation closely” and aims to maintain competitive dividends and keep making significant investments.

Shell announced Wednesday that Peter Voser, chief financial officer, will succeed van der Veer as CEO next July. Van der Veer is 61, a year older than Shell’s typical retirement age of 60.

Marathon said its 2009 capital spending will shrink by more than 15 percent amid the current business environment, and the company is continuing to evaluate splitting its refining business from its exploration and production side.

“We’re on course for a decision by the end of the year,” said Clarence Cazalot, Marathon’s CEO.

In the quarter, Exxon earned $14.8 billion, or $2.86 per share, a 58 percent hike above $9.4 billion, or $1.70 a share, in the third quarter of 2007. Analysts surveyed by Thomson Financial expected earnings of only $2.38 a share.

Revenue reached $137.7 billion compared to $102.3 billion a year ago.

The company said its net income included a $1.6 billion after-tax gain from the sale of a natural gas transportation business in Germany and an after-tax charge of $170 million from interest stemming from punitive damages related to the 1989 Exxon Valdez oil spill in Alaska. Excluding those items, profit was $13.4 billion, which far surpassed Exxon’s previous record of $11.7 billion in the second quarter this year.

Results include impacts of hurricanes Gustav and Ike in September, which affected Gulf of Mexico production and forced shutdowns of refineries in Baytown and Beaumont.

Tillerson said repairs and lower volumes caused by the hurricanes will reduce fourth-quarter earnings by about $500 million.

The quarter’s three-digit oil prices, which have since fallen by more than 50 percent, hiked exploration and production income by $4.4 billion for a total of $9.3 billion. But oil and gas production fell 8 percent. Excluding lower volumes under production-sharing contracts with other countries, which provide fewer barrels as prices rise, Exxon’s production fell about 5 percent.

Refining income rose $1 billion to $3 billion, boosted by margins that rose as oil prices fell. Petroleum product sales of 6.68 million barrels a day were 413,000 barrels lower than the third quarter of 2007 because of lower demand and asset sales, the company said.

Exxon repurchased $8 billion of its stock during the quarter, and spent $6.8 billion on capital projects.

Shell earned $8.45 billion in the quarter, a 22 percent increase over $6.9 billion in the year-ago period. However, oil and gas production fell 7 percent, including Shell’s operations in Canada’s oil sands. The company produced 2.93 million barrels of oil equivalent per day, down from 3.14 million barrels in the third quarter last year.

The company, a major player in the Gulf, blamed part of its crude shortfall on the hurricanes as well as planned maintenance of North Sea operations.

Shell’s exploration and production arm earned $5.5 billion, up from $3.3 billion a year ago. But its refining segment lost $44 million compared to a $2.15 billion profit in 2007.

Marathon earned $2.06 billion, or $2.90 a share, more than double last year’s $1.02 billion, or $1.49 a share, and whizzed past analyst expectations of $2.32 a share. Revenue reached $23.4 billion, compared to $16.9 billion in the year-ago period.

Higher refining margins boosted Marathon’s refining income to $771 million from $482 million a year ago. The company’s exploration and production segment earned $939 million, up from $479 million.

Like the other CEOs, Cazalot emphasized that Marathon maintains a strong balance sheet with substantial cash balances. The company is on track to pocket $2 billion to $4 billion in proceeds from asset sales by mid-2009, he said.

Marathon said sales volumes in the quarter averaged 379,000 barrels of oil equivalent per day, up from 371,000 barrels. The company said production from an offshore Norway development as well as its portion of BHP Billiton’s new Neptune oil and gas platform in the Gulf more than offset declines from hurricane-related shutdowns.

Houston-based Apache Corp. also reported results today, posting net income of $1.2 billion, or $3.52 a share, up 94 percent from $612 million, or $1.83 a share in the year-ago period. Production fell 9 percent because of the hurricanes and continued shut-ins after a July 3 explosion at its gas processing and transportation hub in Australia.

Apache’s revenue was $3.36 billion, up from $2.5 billion a year ago.

Exxon's shares were up 40 cents to $75.05 today on the New York Stock Exchange. Class A shares of Royal Dutch Shell were down $1.72 to $54.10, Marathon was up $2.09 to $27.73 and Apache was up $4.14 to $78.95.